In a blog post [1], RealtyTrac [2]VP Daren Blomquist analyzed data from the company's newly created and interactive, county-level heat map, which shows the returns on home flipping over the last 12 months in 1,050 counties nationwide. He found that although flipping was down nationally in the first quarter of 2014 compared to a year ago, flippers are making bigger profits per flip.
In the first quarter of 2014, the average gross profit per flip was $55,574, a 30 percent return on the initial purchase price. Gross profits increased year-over-year from $51,805 in the first quarter of 2013, a 28 percent return on investment.
However, the total volume of flipped properties has declined, dropping from the previous year. Blomquist noted that 3.7 percent of all single-family homes sold this year were flips, compared to a 6.5 percent share of sales a year ago.
He emphasized that flipping is not a guaranteed path towards wealth creation. "The average flip generated positive gross ROI in 833 of the counties analyzed (79 percent), but gross ROI on the average flip was flat or negative in 217 counties (21 percent)—demonstrating that profiting from property flipping is not guaranteed," he said.
Blomquist commented that one of the most important factors in a successful and profitable home flip is how much work will need to be performed on the house in order to resell it at a higher margin.
The report cited the 14 best counties for flipping, which had to meet some specific criteria in order to qualify. To make the list, counties had to have at least 100 single-family homes flipped in the past 12 months, an average gross return of 30 percent or more, an unemployment rate below the national average of 6.7 percent, and experience an increase in foreclosure activity in the first quarter of 2014 compared to a year ago.
The top counties by gross return on investment (GROI) in Q1 2014 include: Prince George’s County, Maryland (83 percent GROI); York County, Pennsylvania (72 percent); Baltimore, Maryland (71 percent); Campbell County, Kentucky (70 percent); and New Castle County, Delaware (53 percent).
Blomquist found that by volume, many states most known for their foreclosure problems topped the list in total volume of flipped homes.
From April 2013 to March 2014, the top five counties with the most flipped homes included: Maricopa County, Arizona (4,632); Los Angeles County, California (3,610); Douglas County, Nebraska (3,095); Duval County, Florida (2,803); and Clark County, Nevada (2,542).